Correlation Between Predictive Discovery and Anax Metals
Can any of the company-specific risk be diversified away by investing in both Predictive Discovery and Anax Metals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Predictive Discovery and Anax Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Predictive Discovery and Anax Metals, you can compare the effects of market volatilities on Predictive Discovery and Anax Metals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Predictive Discovery with a short position of Anax Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Predictive Discovery and Anax Metals.
Diversification Opportunities for Predictive Discovery and Anax Metals
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Predictive and Anax is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Predictive Discovery and Anax Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anax Metals and Predictive Discovery is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Predictive Discovery are associated (or correlated) with Anax Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anax Metals has no effect on the direction of Predictive Discovery i.e., Predictive Discovery and Anax Metals go up and down completely randomly.
Pair Corralation between Predictive Discovery and Anax Metals
Assuming the 90 days trading horizon Predictive Discovery is expected to under-perform the Anax Metals. But the stock apears to be less risky and, when comparing its historical volatility, Predictive Discovery is 1.2 times less risky than Anax Metals. The stock trades about -0.11 of its potential returns per unit of risk. The Anax Metals is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1.20 in Anax Metals on August 29, 2024 and sell it today you would lose (0.10) from holding Anax Metals or give up 8.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Predictive Discovery vs. Anax Metals
Performance |
| Timeline |
| Predictive Discovery |
| Anax Metals |
Predictive Discovery and Anax Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Predictive Discovery and Anax Metals
The main advantage of trading using opposite Predictive Discovery and Anax Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Predictive Discovery position performs unexpectedly, Anax Metals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Anax Metals will offset losses from the drop in Anax Metals' long position.| Predictive Discovery vs. Northern Star Resources | Predictive Discovery vs. Evolution Mining | Predictive Discovery vs. Bluescope Steel | Predictive Discovery vs. Sandfire Resources NL |
| Anax Metals vs. BlackWall Property Funds | Anax Metals vs. Carlton Investments | Anax Metals vs. Aeris Environmental | Anax Metals vs. Lendlease Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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